What's the best-performing big Canadian marijuana stock so far in 2019, with "big" defined as having a market cap of $3 billion or more? It's not Canopy Growth (NYSE: CGC). Nor is it Cronos Group (NASDAQ: CRON). Scratch Tilray (NASDAQ: TLRY) off the list, too. The biggest year-to-date winner in terms of stock performance is Aurora Cannabis (NYSE: ACB).

Sure, Aurora lags well behind Canopy Growth in market cap. It hasn't landed deals with big companies outside the cannabis industry as all three of its other top four rivals have. Still, not only is its stock performance outperforming these other three companies, but Aurora is also beating Canopy Growth, Cronos, and Tilray in another key area. And that area is critically important for success over the long run.

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Money talks

So where is Aurora outplaying its key rivals? In international medical cannabis markets. Canopy Growth claims the greatest market share in the Canadian adult-use recreational market. But the numbers show that Aurora is No. 1 outside Canada.

In its last quarter, Aurora reported $2.9 million Canadian (US$2.2 million) in sales to European markets. While that's not a huge figure, it's better than any other company.

Despite the lack of information from Cronos and Tilray, however, it's probably fair to conclude that their international sales fell short of Aurora's. Both companies reported total revenue for the last quarter that was much lower than Aurora's revenue. Both Cronos and Tilray also have significantly lower production capacity than Aurora does.

Why Aurora could keep winning

Canopy Growth nearly caught up with Aurora in international sales in the last quarter. The big marijuana producer's international sales also increased at a faster pace than Aurora's did. So can Aurora hold on to its top spot internationally? Probably.

Aurora and Aphria were the biggest beneficiaries of Germany's public tender process for the cultivation of medical cannabis inside the country. Seventy-nine companies competed for the distinction of being able to produce medical cannabis in Germany. Thirteen lots were awarded. Aurora received five of them, the maximum possible, as did Aphria. Germany-based Demecan was the other winner.

Aurora plans to construct a medical cannabis production facility near Leipzig, Germany, once the allotment process is completed. But the company isn't just depending on its operations inside Germany to help it meet surging demand. Aurora should wrap up construction on its Aurora Nordic 2 facility in Denmark by the middle of next year. This facility will be able to produce more than 120,000 kilograms of cannabis annually.

The company also recently announced that it's boosting the growing space for its Aurora Sun facility in Medicine Hat, Alberta, by 33%. This will increase the annual production capacity of the facility from 150,000 kilograms to 230,000. What was Aurora's main reason for adding the extra space? To meet the growing global demand for high-margin medical cannabis.

Aurora's international strategy isn't just focused on Germany. It's supplying medical cannabis in several other European countries, including Czech Republic, Denmark, Italy, Luxembourg, Malta, Poland, and the United Kingdom. Aurora also is positioned well in Latin America thanks to key acquisitions including its purchase of ICC Labs.

The big picture

Why is Aurora's status as the No. 1 player in international markets so important? The opportunity is much larger than the entire Canadian market, including both medical and adult-use recreational marijuana.

Brightfield Group projects that the European medical cannabis market is expected to reach nearly $8 billion by 2023. Around $1.7 billion in annual sales is anticipated for the European cannabidiol market. That's a combined market opportunity of close to $10 billion within the next four years. Over the long run, global medical cannabis markets are likely to become much larger.

Perhaps the biggest hurdle for Aurora in staying on top in global cannabis markets is that it doesn't have a big partner with deep pockets to help fund expansion as some of its peers do. However, Aurora hopes to address that issue with billionaire investor Nelson Peltz helping to find potential partners outside the cannabis industry. If these efforts are successful, Aurora just might retain its No. 1 position in international markets for a long time to come.

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